Customer Acquisition First Principles

How to think about growing your customers

Sep 28, 2020

The Snippet is a Weekly Newsletter on Product Management for aspiring product leaders.

I’ve been running for over a decade now, but I’ve never really had any formal training in improving my speedwork, or efficiency. As I hit my late thirties, I began to realize the need for a training program to increase my running efficiency and speed without getting injured. A few google searches later — articles and blogs from Runner’s World started to pop up in my feed. I ended subscribing to their newsletter. I must say Runner’s World is a great resource for people who want to get stronger with their running.

Another interesting thing happened as soon as I subscribed to these blog posts—I became a Lead in Runner’s World’s Customer Acquisition Funnel. I was somebody that was obviously interested in running, and Runner’s world has plenty of paid products to sell me (after all its a business).

I started receiving my fair share of free articles and blog posts in my mailbox, each one ever so subtly pushing me to purchase their premium/paid content and merchandise. This is a classic example of Customer Acquisition Machines in perpetual motion. If you look at your “Promotions” tab in your Gmail inbox — you’ll find plenty of such acquisition machines in action.

Now just like Runner’s World — If you have a product and want to grow your customers — you’ll need a Customer Acquisition Plan. A plan that is well thought out and validated. A plan that is scalable, repeatable & measurable.

To execute this plan, you’ll need a customer acquisition machine— one that is capable of creating customized experiences based on your target market’s interests — but one that also generalizes well.

Customer Acquisition Plan- The Basics

A good customer acquisition strategy or plan should provide answers to the following questions:

1. How do you find people that have a problem your product solves and how do you get them interested in your product? This is called Lead Generation.

2. How do you move these people from simply “being interested” to a point where they really see how much value the product brings to them? Often termed as Lead Nurturing.

3. Once the Value Proposition has been shared and articulated — How do you make sure these people actually purchase the product and become a customer? This is Lead Conversion/ Customer Acquisition

4. And of course, once somebody is already a customer, How do you make sure that they are making repeat purchases? and more importantly — how do you retain them? Also known as “Customer Retention”

Customer Acquisition Plan - The Execution

Now for executing any and all Customer Acquisition Plans, you’ll need a Lead Management System.

A Lead Management System is a state machine, that facilitates, captures & measures Lead Generation, Lead Nurturing, and Conversions. It facilitates and also measures how successful your Customer Acquisition Strategy is.

The immensely popular Salesforce CRM is a good example of such a system. A Lead Management System like Salesforce (and plenty others) enables you to build a Lead Funnel (or a Customer Acquisition Funnel).

Ok, you are perhaps thinking at this point — Isn’t Lead Management & Customer Acquisition Marketing & Sales’ responsibility?

Customer Acquisition - Who plans? Who Executes?

The Customer Acquisition Strategy is one of those things that cannot be nailed without great collaboration from Product, Marketing & Sales. Here’s what each function brings to the strategy drawing board.

Product’s articulates the customer persona that is most likely to buy
Marketing articulates how to find these personas, market to them & get them interested
Sales articulates given ‘interested’ personas, how to actually CLOSE the sale

During these drawing board sessions, the need for a Lead Management System and creating a Lead Funnel to acquire customers becomes obvious.

While building and executing an effective Lead funnel is a core responsibility of your Sales & Marketing teams — it's imperative that Product Managers understand the components of this funnel, and how these components fit into the overall Customer Acquisition Plan. In short, the Product folk must bring it all together.

From a purely Product Management perspective, This collaborative approach not only enables PMs to have the right conversations with Marketing and Sales, but also ensures that the product you’ve so painstakingly built and launched is set up for success.

Bottomline? PM’s must never toss the product ‘across the wall’ to their Sales & Marketing teams after it's launched. The Launch is in fact just the beginning. Sales & Marketing may be responsible to build and work the funnel, but the PM is accountable for the product’s success.

Ok, Lets briefly talk about the Lead Funnel itself. This is where all the magic happens.

The Cornerstone of Customer Acquisition- AIDA Model

As we talked about earlier, a Customer Acquisition or Lead funnel is basically a state machine with different states and stages. Here’s what the funnel conceptually looks like .

All Customer Acquisition funnels are basically designed based on the AIDA concept .

AIDA is a well-known marketing concept that represents the different stages a person will go through before making a purchase decision for a product. In other words, your product will somehow attract someone’s attention, they’ll show interest in learning more about it (because they have a problem it perhaps solves), once interested they’ll advance to a point where they absolutely want it and finally, hopefully, they’ll pay for the product.

You see its not rocket science. the AIDA funnel is the broad marketing view of how a person who had no idea about your product, learns about it and one day becomes your customer.

Marketers love to call the same thing by many different names. So sometimes you’ll see the customer acquisition/ lead funnel stages be referred to as “TOFU”, “MOFU” & “BOFU”. Again, these are not new things, just different terminologies that different marketers use.

Here’s how TOFU, MOFU, BOFU map to the AIDA concept.

TOFU= Top of the Funnel → The Awareness & Attention Stage.
MOFU = Middle of the Funnel → The Interest and Desire Stage.
BOFU = Bottom of the Funnel → The “I am sold on this, I’ll pay” Stage.

Of course, there is a LOT that goes on in each stage of the funnel but if you are a new PM, or trying to break into Product Management— these are the first principles.

Once you understand these first principles, you can then proceed to define and design the activities in the different stages of the funnel. That’s exactly what we’ll talk about next week.

Thanks for reading & Take care! If you have questions, lets connect on Twitter!